Snyder e-cigarette veto sets tax debate

Karen Bouffard and Chad Livengood
The Detroit News

Lansing — Gov. Rick Snyder on Friday vetoed a package of bills seeking to regulate electronic cigarettes because it would not regulate and tax the devices like tobacco products.

Critics noted the governor’s veto leaves Michigan one of 10 states where minors can purchase e-cigarettes. The bills would have banned use and sale of e-cigarettes to kids under 18.

Snyder said the legislation didn’t go far enough in regulating vapor products. His veto of House Bill 4997 and Senate Bills 667 and 668 was expected. Snyder has previously expressed concern that the nicotine-laced vapor devices should be regulated like a burning cigarette or cigar.

“Electronic cigarettes are nicotine-delivery devices that resemble traditional tobacco cigarettes and share a common ingredient, which is the highly addictive chemical nicotine that is derived from tobacco,” Snyder wrote in his veto letter to legislators.

Michigan has the 10th highest tobacco tax in the nation, $2 on a pack of cigarettes or $20 per carton. Estimated tobacco tax revenue for fiscal year 2013-14 is $936.3 million. But cigarette tax revenue has been declining, down a little less than 3 percent since fiscal year 2011.

It’s hard to predict how much state tax revenue e-cigarettes would generate if they were regulated like other tobacco products. Michigan collects a 32 percent tax on cigars and other noncigarette tobacco products.

Jim McCormick, chief financial officer of Grand Rapids-based Electronic Cigarettes International Group, said it’s difficult to gauge the size of Michigan’s e-cigarette market because a variety of sources, including off-the-grid vapor shops, sell the devices.

“We are fully supportive of sensible regulation. We believe it’s an adult product,” McCormick said. “(But) it is not a tobacco product, and it should not be taxed as a tobacco product. We are adamantly against that.”

Taylor Smith, 23, of Berkley has been using an e-cigarette for about a year. He started as a way to quit smoking cigarettes, and it worked.

Smith agrees e-cigarettes should not be sold to minors, but does not think they should be regulated in the same way as tobacco products. It would be a mistake to hike the cost with taxes because it could discourage people from using e-cigarettes to quit smoking, he said.

“It’s not a tobacco product,” Smith said. “It’s a healthy alternative to smoking. If you start imposing the cigarette tax, it’s going to become very hard to maintain that.

“I don’t see any research that points to possible health concerns. And even if there were health concerns, they would be minor compared with tobacco.”

Snyder said the legislation would have been inconsistent with the Food and Drug Administration’s proposed regulation of e-cigarettes as a tobacco product.

The governor said enacting the proposed law would “unnecessarily sow confusion” and “send a mixed health message to the public.”

The Michigan State Medical Society praised Snyder for the veto and argued the legislation was dangerous because it could have weakened existing tobacco regulations by carving out exemptions for e-cigarettes and undermining the state’s fight against smoking and tobacco-related diseases.

“The medical science is clear — e-cigarettes are dangerous and threaten the health of children,” said Dr. James Grant, president of the Michigan State Medical Society.